Critical Illness  

Why you should consider children's critical illness cover

Why you should consider children's critical illness cover

Advisers should give greater consideration to children's cover when advising on adult plans, Alan Lakey has claimed.

The director of Berkhamstead-based Highclere Financial Services and founder of CI Expert, said too often, children’s cancer cover has "been a footnote and not considered a major component of a critical illness plan.

"Certainly few advisers gave it much consideration when it came to plan selection."

According to Mr Lakey, children’s cover has been around for more than 20 years, with Aviva including it from March 1994.

He said: "Back then many insurers paid lower maximum sums – Aviva started at £10,000, increasing it to £20,000 in October 2009 and then to £25,000 in July 2012.

Earlier this month, Aviva raised its cover to £50,000. 

Mr Lakey said: "A number of insurers have intimated that they are considering increasing the maximum payment to £30,000 or £50,000 and Aviva already makes a fixed £50,000 payment for 12 named conditions if the children’s upgrade option is taken.

"Advisers would do well to give greater consideration to this element of the plan when making their recommendations."

Data suggests there has been a growth in claims for the children's part of critical illness cover.

According to data from CI Expert, payments have typically represented 2 per cent to 4 per cent of all CIC claims.

In recent years this figure has started to rise, with Aviva showing 4.2 per cent in 2016 and AIG a massive 10.2 per cent.

CI Expert: children's claims statistics for 2016

Legal & General3.50%
Royal London3.80%

Mr Lakey added: "There are two reasons for AIG being above average – one is because they do not have a historic legacy of less comprehensive plans and the second is due to their superior cover which unlike all bar Royal London runs from birth till age 22.

"Also, like other insurers they have not excluded congenital conditions and uniquely include type one diabetes, a condition that tends to impact between age 15 and 30."

Rob Harvey, independent protection specialist for Drewberry Insurance, agreed when it comes to advising on what sort of cover to give an adult, it is worth taking into consideration the children's cover embedded within a plan.

He said: "The most comprehensive approach is likely to include elements of private medical insurance, income protection and critical illness cover.

"This means children’s cover is ultimately an exercise in identifying the ‘core’ risks that clients are concerned with covering, and then building the most complete plan from the premiums they can afford.”

Find out more

To find out more about different types of children's protection policies, read FTAdviser's Guide to Family Protection, which accounts for 60 minutes' worth of CPD.